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The dark side of marital leadership: Evidence from China

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  • Yao, Shouyu
  • Zhao, Weijia
  • Sensoy, Ahmet
  • Cheng, Feiyang
  • Goodell, John W.

Abstract

Using a unique dataset of Chinese private firms, we find that marital leadership is associated with higher propensity for financial fraud. We examine the potential economic mechanisms that lead to this result, finding that weak internal supervision and inefficient decision-making provide crucial linkages between marital leadership and financial fraud. However, well-functioning corporate governance mechanisms reduce the negative effects of marital leadership. Our findings provide important empirical evidence for the effect of family involvement in corporate governance and contribute to the literature on the determinants of financial fraud in listed firms.

Suggested Citation

  • Yao, Shouyu & Zhao, Weijia & Sensoy, Ahmet & Cheng, Feiyang & Goodell, John W., 2021. "The dark side of marital leadership: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:finana:v:77:y:2021:i:c:s1057521921001770
    DOI: 10.1016/j.irfa.2021.101844
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    More about this item

    Keywords

    Marital leadership; Financial fraud; Corporate governance; China;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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